For those of us who attended the Cowen Conference last year, we’re just about at the one-year anniversary of our quarantine – wow. In addition to mastering critical life skills, like how to bake a perfect loaf of sourdough or how to make the Alison Roman chickpea stew, we’ve all learned so much about how to be resilient, nimble professionals. Who would have thought we’d ever grow so accustomed to working from home, over Zoom that returning to the office almost feels more daunting than another week of lockdown?! Just kidding! We are all eagerly awaiting the day we’re vaccinated and able to reconvene in person, and feeling so grateful for our many industry colleagues who have been working so hard to ensure that the end really is in sight.
Top Biotech CEOs of 2021
Last week, the Healthcare Technology report announced its top 25 biotech CEOs of 2021, featuring CEOs across all therapeutic areas who successfully advanced research and brought breakthrough drugs and treatments to market. Among the awardees were several Stern IR clients: Arvinas’ John Houston and Curis’ James Dentzer. Congrats!!
This Week in ESG: Climate Change and Diversity
Last week, the SEC acting chair Allison Herren Lee issued a statement, which directed the SEC’s Division of Corporate Finance to “enhance its focus on climate-related disclosures in public company filings,” and further suggested that the Commission may seek to update its 2010 guidance on climate risk as early as later this year.
Based on this statement, coupled with the increased focus on climate change by the Biden administration, the team at Davis Polk issued an alert, recommending that companies should:
- Carefully review any climate change disclosure in upcoming SEC filings, including 10-Ks, against the 2019 guidance;
- Consider climate disclosures in any website or other unofficial disclosures and whether any of those disclosures should be modified or included in SEC filings because of their materiality to shareholders; and
- Expect increased Staff comments on their climate change disclosure.
Also last week, Senator Bob Menendez (D-NJ) introduced a new bill that would require the SEC to update its rubric on racial/ethnic makeup, and require public companies to disclose racial, gender, ethnic makeup and veteran status of their boards and senior management. The legislation already has strong support, including from the U.S. Chamber of Commerce, and companion legislation is expected to be introduced shortly in the House, by Representative Gregory Meeks (D-NY).
SEC: Cracking Down post-Game Stop?
Late last week, the SEC suspended trading activity in an additional 15 companies because of questionable trading following apparent social media attempts to inflate their stock price. This action is part of the SEC’s ongoing efforts to review market and trading data to identify securities where the public interest and protection of investors requires trading suspensions, and came with a warning – probably directed at retail investors – “to exercise caution and do their diligence before investing generally, including in companies promoted on social media.”
Under federal securities laws, the SEC can suspend trading in a stock for 10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met.
Biopharma Venture Investing Boom
Despite the upheaval caused by the COVID-19 pandemic, 2020 was marked by record-setting activity in the biotech private markets. This week, Endpoints published its “Top 100 VCs in Biotech 2021,” which listed the most active investors in 2020 venture rounds. Per their data bases, the top investor of 2020 was OrbiMed, who participated in 47 deals in 2020. They are closely followed by RA Capital, who participated in 39 rounds and Cormorant Asset Management, who participated in 35 rounds. A few other interesting findings:
- 9% of the firms invested 85% of the total dollars into healthcare and life sciences rounds in 2020.
- The top 100 investors were among the 1,167 participating in all 2020 private rounds.
- The top 100 invested in 419 rounds totaling $29.8 billion out of the $35.2 billion for the year coming from venture, private equity, family offices, institutions, and corporate venture arms.
- Private investments in discovery platform and preclinical biotech companies continued to increase year over year. The earliest stage platform companies raised $4.9 billion in 93 rounds last year.
And Fund Flows Continue!
This week, we saw two major investors announce new private funds:
- OrbiMed raised $3.5B, which will be divided among three private investment divisions, including one focused on early-stage companies in North America and Europe, a second aimed at companies of various stages in Asia, and a third, which will go into OrbiMed’s eighth biotech venture fund. The firm plans to make investments from $10 million to $100 million in biotech, medical device and diagnostics companies while looking at earlier-stage opportunities in North America and Europe and growth stage opportunities in Asia. A small portion of the capital will land in OrbiMed Royalty & Credit Opportunities III, a fund providing debt capital to companies and helping cash in on royalty streams.
- Additionally, Sofinnova Partners raised $540 for a new crossover fund, which will focus on late-stage companies. While Sofinnova typically focuses on European companies, they also have reserved a portion of this investment capital for US biotechs.
The markets were slightly down this week with the NASDAQ, DJI and S&P 500 closing down 3%, 1% and 2% respectively. The VIX was also down 2% sitting at 28.39 as of market close on 3/4. The biotech markets had a tougher week overall, with the NBI, BTK and XBI closing down 6%, 8% and 6% respectively.
Despite the market setback, we saw multiple deals price:
- 2 IPOs: Innovage ($350M); Oscar Health ($1.4B).
- 18 follow-ons: Aslan ($60M); Adamas ($55M); AVITA ($69M); Stern IR Client Ayala Pharmaceuticals ($25M); Celcuity ($28M); Cutera ($125); Heska ($175M); Halozyme ($700M); iCAD($22M); InflaRx ($75M); Karuna ($250M); MannKind ($200M); Morphic ($245M); Nabriva ($25M); PLx ($63M); RedHill ($35M); Salarius ($20M); Satsuma ($80M).
- 10 private financings: Artiva (Series B, $120M); ATAI (Series D, $157M); Carisma (Series B extension, $59M); Century (Series C, $160M); DTx Pharma (Series B, $100M); eGenesis (Series C, $125M); Stern IR Client Exscientia (Series C extension, $100M); FogPharma (Series C, $107M); Oxular (Undisclosed, $37M); Tenaya (Series C, $106M).
Additionally, a big congratulations to Stern IR client Pandion, which was acquired by Merck last week for $1.85B.